All Forum Posts by: Percy N.

Coincidently, I was at a roundtable discussion yesterday where the keynote speaker was Sam Zell and someone asked about the SFR rental market. He echoed some of the same points and said the jury is out in his mind since he needs to see the model work at scale when you are trying to maintain different homes with different roofs, HVAC systems, etc that are spread over different geographic markets (keep in mind his reference point was 100s or 1000s of homes). Planned or BTR communities are a little different.

Another point he made was that the transaction costs for SFR on a % basis tend to be much higher.

I would also add that the underwriting models will be different. Who will be managing the properties? What is the exit plan? Risks? Volatility of SFR vs MF etc.

Goes with my observation that at 9am most of the cars in the office building's parking lot belong to employees and owners of the companies. After 5-6pm only a handful of cars remain and wanna guess whose cars those are? 

My agenda for this weekend is to review draft docs on a 244-unit Multifamily opportunity and PPM docs for a $50mm fund we are raising so that I can get them back to the attorneys by Monday so that we can close before the end of the year.

@Stephen Jones, first, congratulations on your success thus far!

Where are these properties located? Are you and your wife 100% owners (gives you more flexibility).

In addition to the 1031 option, there is a 453/453a Different option if you want to sell.

If you want to continue to operate the existing properties and scale, maybe look into an "invest in kind" to a fund.

@Nick Russo there are Meetups and REIA meetings in the Philly area you can attend.

We are owner/operators of multifamily but our properties are outside of Philly.

If you have some general questions, you can send me a message.

@Jennifer T. check local laws first and if allowed, you can bill utilities back to the residents based on a percentage of their square footage, number of residents, etc or a flat fee based on their floor plan type. Some localities do not allow the flat fee especially if you go over the utility expense.

There are also companies who will do the monthly calculations and billing for you but that may only be worth it if the complex is over 100 units.

Have you checked with the utility company to see if they can give you as flat monthly cost for electric?

 Understand. This is a tough time to be raising funds. Were you able to terminate the PSA without much harm (or assign it to someone)? Talk to the broker and seller and explain that the capital markets are crazy and that investors are nervous. Ask for more time at the very least.

@Alex Khodnev, as @Brian Adams stated, this scenario is typically covered in the PSA under funds received post-closing. We even added a clause specifically for rental assistance programs.

If nothing else, have your attorney draft a letter and send it to the seller.

@Kwame Searcy if your network is limited, I am curious what made you go down the 506(b) route vs the 506(c) route?

With 506(c) you could at least advertise the deal and attract accredited investors and not rely on an existing relationship.

What size? Assuming 100+ units.

It's a bit tricky right now as everything seems to be in flux in the last 30 days but I would say

Class A - Sub 4 to 4.5

Class B - 4.5 to 5

Class C - 5 to 6